Speech given by OECD Secretary-General Mathias Cormann to launch the OECD Interim Economic Outlook on 23 September 2026 in Paris, France.
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Good morning,
Welcome to the launch of the OECD Interim Economic Outlook.
Its title is “Weathering Successive Shocks”.
And that is exactly what the global economy has been doing.
In recent years it has come through a pandemic, a surge in inflation and, last year, an abrupt rise in tariffs and trade policy uncertainty.
And now the latest major shock: the energy shock from the ongoing conflicts in the Middle East.
It has absorbed that shock, too, better than expected.
I have three messages this morning.
The global economy has adjusted. But it remains exposed. And the policy choices governments make now will decide how well we weather the next shock.
First, the adjustment.
Global growth slowed from an annualised rate of 3.6% in the second half of last year to 2.6% in the first half of this year.
But that is well above the 2.0% we projected in June.
Two forces explain this resilience.
Energy markets adjusted quickly – on both the supply side and the demand side.
On the supply side, extra production outside the Gulf, alternative export routes and large drawdowns of inventories all helped to fill the gap.
Together, these made up around half of the oil exports lost to reduced shipping through the Strait of Hormuz.
Much of the rest came from lower demand. Consumers and businesses cut back. China, in particular, sharply reduced its energy imports and its oil consumption.
That has helped to balance the market. But it also means prices could climb further if demand recovers faster than expected.
And AI gave growth a powerful boost.
In the 12 months to July, production of computers and electronics grew by 10% in the European Union and by 12% in the United States.
That is more than ten times the growth of the rest of industry.
Almost two-thirds of the growth in global goods trade now comes from AI-related products.
Second, the exposure.
The buffers that absorbed the first shock are thinner now.
Global oil inventories were 507 million barrels lower in August than in February – a fall of around 6%.
The United States’ Strategic Petroleum Reserve is at its lowest level since 1982.
Europe’s gas storage is at its lowest level for this time of year in more than 15 years.
And energy prices are rising again – just as those buffers have run down.
This month, oil went back above 100 US dollars a barrel, after falling to around 70 dollars in early July.
Gas prices have risen even more sharply.
In Europe, they are at their highest since 2022.
In Asia, they have surged too.
So inflation is picking up again.
More than half of G20 countries now have inflation above their central bank’s target.
And this shock is not behind us. It is still working its way through the economy.
Disruptions to production and exports in the Gulf have intensified in recent weeks. And there are new threats to shipping through the Bab el-Mandeb Strait.
Bottlenecks in refining are adding a second layer of cost on top of higher crude prices. Refinery margins have risen several-fold since February – and that is showing up at the pump.
Gas prices have gone beyond even the “prolonged disruption” scenario we set out in June. The path we now assume is around 60% higher.
Household savings and company inventories will not cushion the blow indefinitely.
So we expect the drag on growth to be greatest around the turn of the year, with inflation peaking in the final quarter of 2026 – before both ease as energy prices come down.
What does this mean for the outlook?
This year looks a little better than we expected in June. But the global economy is still weaker than last year.
We project global growth of 2.9% this year and 3.0% next year, after 3.4% in 2025.
Compared with our June projection, that is 0.1 percentage point higher for this year – and 0.1 percentage point lower for next year, because the energy shock is proving more persistent.
Across the major G20 economies, the picture is broadly stable.
Inflation across the G20 rises from 3.4% last year to 4.1% this year, before easing to 3.6% next year.
That is 0.1 percentage point higher than our June projection for this year, and 0.5 percentage point higher for next year.
Risks remain substantial. Let me highlight four.
The most immediate is a further cut in energy supplies from the Middle East.
Our projections assume that energy prices follow futures markets as of 14 September.
On that basis, oil averages 105 dollars a barrel in the last quarter of this year and 85 dollars next year.
But that path is far from assured.
Damage to production facilities, continued restrictions in the Strait of Hormuz, or disruption to alternative routes such as the Bab el-Mandeb Strait could all cause shortages.
Food prices are a second risk.
Since late May, futures prices for food in the first half of next year have risen by around 8%.
Hot, dry weather has hurt harvest prospects. And Russia’s war of aggression against Ukraine continues to disrupt grain exports through the Black Sea.
There is also a 95% chance of a very strong El Niño before the end of this year, which could damage crops in several regions.
Third, fiscal and financial risks have grown.
Thirty-year government bond yields are at their highest in 15 years or more in six of the G7 economies.
That means higher debt-servicing costs for governments whose budgets are already under strain.
And it means higher borrowing costs for businesses and households.
Fourth, AI cuts both ways.
Faster adoption could lift productivity and growth.
But investor expectations are very high, and AI infrastructure needs enormous amounts of capital.
If earnings disappoint, investment could slow sharply and asset prices could fall.
Put some of these risks together, and the impact is material.
In our illustrative downside scenario, persistently higher energy and food prices and tighter financial conditions cut 0.7 percentage point from global growth in 2027 and add 1.1 percentage points to inflation.
That is not our baseline.
But it shows how quickly separate vulnerabilities can reinforce one another.
That brings me to my third message: policy.
First, fiscal policy.
Higher energy prices are putting pressure on governments to extend, or reintroduce, support for households and firms.
Where support is needed, it must be targeted and temporary – and it should keep the incentive to save energy and diversify supply.
Yet today, only about half of the active energy-support measures across 50 countries are targeted.
Untargeted support adds to public spending at a time when debt is already high – and when the costs of ageing, defence and debt servicing are all rising.
In every G20 country except Germany and Türkiye, public debt as a share of GDP is higher today than it was at the end of 2007.
Governments need to contain and reallocate spending, make the public sector more efficient and make tax systems work better.
And they must protect the investment that drives future growth – in education, in skills and in digital infrastructure.
Second, monetary policy.
This year’s energy shock has ended the global cycle of interest rate cuts.
Around one in three central banks around the world has raised rates in the past six months – the highest share since 2023.
Central banks must keep inflation expectations firmly anchored.
They may not need to respond to temporary, energy-driven rises in inflation.
But they must act if price pressures broaden – or if growth slows sharply.
Third, structural reform.
Managing today’s pressures is essential. But governments must also build tomorrow’s growth and resilience.
That means diversifying energy supply. It means helping workers and capital move to the most productive firms and activities. And it means preparing people for technological change.
Here, the foundations are weakening.
The latest results from our Programme for International Student Assessment (PISA), published two weeks ago, show reading and mathematics performance across OECD countries at the lowest level ever recorded.
Stronger skills, more dynamic markets and faster adoption of new technology are the way to lift productivity and growth.
In closing,
The global economy has weathered another shock better than expected.
But its capacity to absorb shocks is not unlimited.
Energy inventories have fallen.
Fiscal space is shrinking.
Financing costs are rising.
And resilience alone is not enough.
Growth across the OECD remains too modest.
It is stronger growth that creates opportunity and raises living standards.
So our task is twofold: stay resilient – and grow faster.
That takes sound fiscal and monetary policy.
Greater energy security.
Competitive markets.
Better skills.
And reforms that lift productivity.
The OECD stands ready to support governments in that work.
Thank you. And with that, I hand over to our Chief Economist, Stefano Scarpetta, to take you through the detail of our analysis.
Working with over 100 countries, the OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.